SME exporters enjoy higher margins than domestic peers: Crisil

NEW DELHI: SMEs exporting goods, mainly in sectors like engineering and leather, earn higher profit margins compared to their domestic peers as they enjoy better pricing in global markets, credit rating agency Crisil said in a study.

The study was conducted on 1,800 small and medium units (SMEs) mainly in four export oriented sectors--agricultural and processed foods, engineering, leather and textiles.

It indicated that larger proportion of SMEexporters have operating profit margins of over 10 per cent than their counterparts selling in the domestic market.

"The main reason behind the variation in margins arises from superior pricing power enjoyed by these SMEs in international markets," it said.

Indian exporters also take advantage of access to raw material, availability of cheap labour and exploit niche markets available across the globe.

The rating agency also asked the policy makers to devise strategies which could aid infrastructural bottlenecks and strengthen SMEs to enter the international market.

In leather and processed food segment, SME exporters have more than 5 per cent profit margin as most of the local units are engaged in low value-added segments like rice milling, pulses processing and leather tanning.